Corporate social responsibility - Essay Example

? Accounting theory Accounting theory Corporate social responsibility (CSR) reports do not provide shareholders and stakeholders with useful information on corporate social and environmental but are rather a public relations vehicle. Introduction The major stakeholders of a company to be given information by the Corporate Social Responsibility include employees, customers, the government, suppliers, public interest groups, banks, and customers. The research using accounting theories in this context will focus on the primary stakeholders without whom the company cannot survive. Studies on secondary stakeholders or non-economic shareholders, that is the ones who affect or influence, affected, or influenced, yet are not involved in transactions with a company are not very significant to its survival. According to research, while a number of stakeholders are interested in the business activities of the CSR, most of the stakeholders view their voluntarily developed reports to have insufficient credibility and generally, they are skeptical of the company’s social responsibility reporting. Given that this is a discussion question, the issue will be looked at from both perspectives of the context. We must first of all look at the different accounting theories and what they suggest about the work of CRS in a company then give a conclusion later. The stakeholder theory for instance extends legality arguments to regard not only society in its entirety but specific stakeholder groups. These stakeholders require various reports and companies will respond to their demands in a number of ways. According to scholars studying this theory, stakeholder management is a driver of corporate social responsibility activities and reports. This is called the managerial branch or positive stakeholder theory in which more authoritative stakeholders are more probable to receive reports about the firm because they control most of the resources (Brennan & Merkl-Davies, 2013, p. 110). Accounting theoretical work on CSR has come up with various theories on the issue of firms to disclose or report information regarding the activities of their CSRs. Most of them however come from the broad political economic theory, which is described as the economic, social and political frameworks in which people’s life occur. Legitimacy theory is one of these theories and states that reporting serves as a communication mechanism to manipulate and at the same time inform the firm’s actions perceptions (Hodgson et al, 2010. P. 23). Some authors argue that information given by the CSR is founded on a political “social contract” among those in power, such as the government and the people who grant them that power. Further, reports provided within the social contract for example, involve financial reports meant for shareholders, but it is argued that such reports include relevant information to a broader range of stakeholders (Blackburn et al, 1994, p.201). A big percentage of the research done on CSR and the areas related to it by accounting academics up to the present times have been on how people account for environmental and social activities of companies. However, the big question can be raised to state if such accounting results in any change in organizational behavior, in terms of being sustainable than it was before. Moir, 2001, argues that while this may be a challenging question, there is evidence of change in the responsibilities and routines in the organizations. This is mostly realized in the use of accounting techniques and tools as well as in the use of the accounts types that are produced by organizations. However, he does not stop at this point by stating that even though such changes are evident, deeper degrees of change to rationales and attitudes do not always occur and these organizations do not embrace the sustainability agenda as desired. In this regard therefore, the challenge remains to face business people, accountants, and the society at large to go on striving for attitudinal modifications about CSR if there is really a need to have an impact on global environmental and social issues (Aupperle et al, 1985, p.448). It is logical to argue that CSR divert from the real issue or their main work in an organization. They do not correctly carry out their work of helping organizations to gain legitimacy, avoid regulations, and make decision makers and markets available; rather shift their attention to the privatization of public roles. CSR make it able for businesses to put into place ineffective market-founded solutions to environmental and social crisis, deflecting blames or issues caused by organizational operations onto the clients and guarding their interests while hindering attempts to find sustainable and just solutions (Merkl-Davies & Brennan, 2011, p. 420). It can be argued that CSR has simply become a public relations vehicle because it sometimes sells. Through appealing to the desires and consciences of the customers, CSR engage in activities that help corporations to develop brand loyalty and build a personal relationship with their esteemed customers. Majority of company charity tie-ins obtain corporate admission to target markets and the engagement of the charity provides the company’s reports much greater power. In the media flooded culture, firms are looking for more innovative techniques to get across their information, and CRS gives up numerous potential avenues like the guerilla marketing or word of mouth for delicately reaching consumers (Arthur, 2003). Instead of giving reports on the environmental and social performance of the company, they help in green washing the image of the company to cover up the negative effects (Hooghiemstra, 2000). They do this by saturating the social network with the company’s positive images of CSR credentials. It is argued that CRS facilitates companies to claim progress even though there is no evidence to verify the change because they never provide reliable reports. This implies that since much of the company case relies on businesses being viewed as socially responsible, the CSR department will continue to be used as a vehicle of Public relations for as long as it is much easier spinning than changing. An example to prove that CSR has often shitted from its responsibilities of providing shareholders and stakeholders with useful information on corporate social and environmental but are rather a public relations vehicle is in the submission of Monsanto, ExxonMobil, Pfizer, Bank of America, and Microsoft (Deegan & Rankin, 1996, p. 58.). This submission contended that if a company’s each press release, customer mailing, letter to an editor, and website posting are based on criminal and civil actions, company speakers will find it challenging to address the problem of public concern involving their business operations, goods, and services. This case simply supports the denigration that CSR is actually a PR vehicle. Companies would not be concerned about possible lawful actions if they valued transparency, truth, and liability as much as they seem to care. The court submission indicate how vital it is for communal America to protect itself against an official verdict which would make it more problematic for firms to make misleading and false statements to protect their image (Mahoney et al, 2013, p. 351). Conclusion Social responsibility (CSR) reports do not provide shareholders and stakeholders with useful information on corporate social and environmental performance but is merely a public relations vehicle.CSR being criticized to be a PR exercise in a predictable issue, putting in mind that most of the workers in PR spend most of their time in the public relations and communication departments. They also strategize through dialogues with codes of conduct, NGOs, and social reports. The argument can have many views, but the fact remains that CSR has developed a rebrand, a language shift, and a new image that seems caring, yet it has no substance. Just like the Iceberg, numerous CR activities are invisible, since they are active attempts to increase their dominion in the company as opposed to a defensive image management approach. Regulation, including policies on how companies can be structured and on the upshot they can have on the society and the environment as well as their dealings with their staff and supplementary stakeholders is the best way that a democratic community can manage what is acceptable and what is undesired in corporate behavior. References Arthur D Little Limited. 2003. The Business Case for Corporate Responsibility, December. Cambridge. Aupperle, K, Carroll, A and Hatfield, J. 1985. An empirical examination of the relationship between corporate social responsibility and profitability. The Academy of Management Journal, vol 28, no. 2, June, pp 446-63. Blackburn, V, Doran, M and Shrader, C. 1994. Investigating the Dimensions of Social Responsibility and the Consequences for Corporate Financial Performance. 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Critical Perspectives on Accounting, Vol. 24 No. 4-5, pp. 350-359. Merkl-Davies, D. M. and Brennan, N. M. 2011. A Conceptual Framework of Impression Management: New insights from psychology, sociology, and critical perspectives. Accounting and Business Research, Vol. 41 No. 5, pp. 415-437. Moir, L. 2001. What do we mean by corporate social responsibility? Corporate Governance, Vol. 1 No. 2, pp. 16-22. Read More